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The Impact of Financial Literacy on Sustainability of Small Businesses: Government Policy Perspective

In: Macroeconomic Risk and Growth in the Southeast Asian Countries: Insight from Indonesia

Author

Listed:
  • Kusdi Raharjo
  • Saparila Worokinasih
  • Nur Imamah

Abstract

Indonesia is one of the largest developing countries in the world and is a profitable market for investors. Small and medium-sized businesses are one of the business activities that contribute to the improvement of the Indonesian economy. This study examines the influence of government policies on financial literacy and the impact of financial literacy on small and medium enterprises’ (SMEs) sustainability. It employs the resource-based view (RBV) and knowledge-based view (KBV) to develop conceptual models. The model is tested with data collected from 132 SMEs in Malang-East Java, Indonesia, in 2020 through a structured questionnaire. This study uses the G-Power version 3.1 software for initial analysis and the partial least square (PLS) analysis method to test this hypothesis. The results show that government policies positively affect SMEs’ sustainability, and financial literacy positively affects SMEs’ sustainability. This implies that government policy and financial literacy are essential factors for SMEs’ resources and knowledge for business sustainability.

Suggested Citation

  • Kusdi Raharjo & Saparila Worokinasih & Nur Imamah, 2023. "The Impact of Financial Literacy on Sustainability of Small Businesses: Government Policy Perspective," International Symposia in Economic Theory and Econometrics, in: Macroeconomic Risk and Growth in the Southeast Asian Countries: Insight from Indonesia, volume 33, pages 19-33, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-03862023000033a002
    DOI: 10.1108/S1571-03862023000033A002
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    More about this item

    Keywords

    Government policy; financial literacy; small and medium enterprises; sustainability; developing economy; Indonesia; E60; G28; G53; M1;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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